Bill Finerfrock and David Connolly and Elizabeth Stitzinger

Washington Report – November, 2008

Bill Finerfrock and David Connolly and Elizabeth Stitzinger

Capitol Associates

Change is in the Air

New Rules, New Process

Fee Schedule Final Rule Published

Economic Woes Affecting Healthcare Community

Guide to the E-Prescribing Incentive Program now available online!

Getting Better?

CMS Seeks Comments on Proposal to Limit Coverage to Morbidly Obese

Patients

CMS Proposes Three National Coverage Determinations

RAC program on hold

CMS Transmittals

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Change is in the Air

The outcome of the November elections will bring about great change in Washington. Not just in the key players but in the approaches that will be taken to solving some of our nation’s most vexing problems. Although healthcare reform was a major topic of discussion during the Presidential and Congressional elections, it is not clear where it will fall in the “things to do” list being compiled by President-elect Obama and the 111th Congress.

In recent weeks President-elect Obama has moved quickly to name key members of his Cabinet.

Former Senator Tom Daschle (D-SD) has been announced as President-elect Obama’s choice to head the Department of Health and Human Services (HHS). To date, there have been no formal announcements on who the next President will select to head the Centers for Medicare and Medicaid Services (CMS).

Senator Daschle is an interesting choice for the HHS position as he brings a great deal of Washington experience to the post. This is certainly a change from the past two Administrations where the HHS Secretary has been someone with no direct Washington experience. In fact, if confirmed, Senator Daschle will be the first former U.S. Senator to serve as Secretary of HHS since Ronald Reagan’s first Secretary of HHS, Dick Schweicker (R-PA).

Although not known as a major player on health policy matters when he served in the Senate, Daschle has spent considerable time on health policy since leaving that chamber in 2004. In 2007, Daschle coauthored the book, “Critical: What We Can Do About the Health-Care Crisis”. Daschle’s co-author, Jeanne Lambrew, is also expected to play a key role in the Obama Administration.

Since leaving the Senate, Daschle has remained in Washington as a Senior Policy Advisor with the law firm Alston & Bird. Daschle’s wife, Linda, is a well-known Washington lobbyist focusing on aviation industry interests.

Lambrew is a Senior Fellow at the Center for American Progress (headed by Obama confidant John Podesta) and an associate professor of public affairs at the Lyndon B. Johnson School of Public Affairs at the University of Texas. She specializes in health care policy. During the Clinton Administration, Lambrew served as Associate Director for Health at the Office of Management and Budget and as a senior health analyst at the National Economic Council. Although no formal position has yet been identified, she has been mentioned as a possible candidate for the CMS Administrator position.

Other possible CMS candidates are former Clinton Health Advisers, Judy Feder and Chris Jennings.

Feder was considered a key architect of the Clinton Healthcare Reform plan put forward in the early ‘90s. After stints at both the Brookings Institution and Urban Institute as a health policy scholar, Feder joined the faculty of Georgetown University in 1984. From 1999 through 2007, she was Dean of Georgetown University's Public Policy Institute. Most recently, Feder was the Democrat candidate for a seat in Congress in Virginia’s 11th Congressional District (suburban Washington DC). Feder lost to incumbent Republican Frank Wolf. This was Feder’s second loss to Wolf having previously challenged the long-time incumbent in 2006. Feder’s “reward” for taking on a GOP stalwart may be a high-level position in the Obama Administration.

Chris Jennings is another familiar face in Washington healthcare circles. After working on Capitol Hill for more than a decade for three Democrat Senators (Glenn – Ohio, Melcher – Montana, and Pryor - Arkansas) Jennings joined the Clinton Administration in 1993. Initially brought in as an advisor to the HCFA Administrator, it wasn’t long before he was tapped as President Clinton’s Senior Health Advisor. A veteran of health policy debates for over two decades, Jennings would enter the Obama Administration with a great deal of experience in both politics and health policy. Since 2001 Jennings has operated his own health policy consulting firm advising corporate, labor and non-profit associations.

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New Rules, New Process

Presidential transitions are always an interesting time in Washington. This transition is particularly intriguing because it is the first since 9/11.

Many have been surprised by the speed with which the Obama Administration has been taking shape in the days since the November election. Names of Cabinet nominees are being released on a regular basis and far sooner than in past transitions.

Some have speculated that this rapid transition might be due to an Obama team that was better prepared than any of its predecessors and President-elect Obama’s selection of a Washington veteran (Rahm Emmanuel) as his chief of staff to oversee the transition. In reality, the relative speed with which President-elect Obama has put together his Cabinet is due to changes in the transition process.

Subsequent to 9/11, President Bush dramatically revised the Presidential transition process. The 9/11 Commission expressed concern that the lengthy and drawn-out process of the transition and assumption of power by a new President could leave the United States vulnerable (or at least our enemies might perceive us as vulnerable) during this transition time. Therefore the Commission recommended major changes in how the Presidential transition should be conducted. Those recommendations have been embraced by the Bush Administration and policies were put in place to make this the smoothest transition in our nation’s history.

Although the Constitutional requirements could not be altered, steps are being taken to allow the new Administration to be “up and running” much more quickly than in the past.

One area that was changed was the commencement of the background checks required of Presidential appointees. All Presidential nominees are required to go through an extensive background check. These checks are conducted by the FBI and look into ALL aspects of a nominees personal life. These checks can often take months to complete given the amount of information that is collected and reviewed and the large number of individuals who must be “vetted” at the beginning of any new Administration.

In years past, the President-elect was not able to submit names to the FBI for the requisite background check until well after the election. Under policies instituted by the Bush White House, names of potential nominees were submitted to the FBI by both the McCain and Obama Campaigns weeks prior to the election. The FBI began the background checks on potential nominees weeks in advance of the election thereby allowing the new President to move ahead with his announcements earlier than ever before.

As we all know from our High School Civics class, the Senate must give its “advice and consent” to hundreds of high level Presidential appointees. Prior to the public part of the confirmation process, weeks of preparation, interviews and analysis are conducted. For example, every Senator will be given the opportunity to meet privately with Senator Daschle to ask questions of the nominee before he goes before a single Committee. In the case of the HHS Secretary, he must be approved by both the Senate Finance and the Senate Health Education Labor and Pensions Committee before his name goes to the full Senate for consideration.

The fact that Congressional investigators can begin their work in December, instead of January, means that many Obama nominees will be confirmable within 24 – 48 hours of President Obama being sworn into office on January 20th. More importantly, sub-cabinet level individuals involved in the transition can get classified or restricted information much sooner in the transition than in previous years. Reports have circulated that representatives of both Obama and McCain, for example, were receiving regular national security briefings by senior officials in the weeks leading up to the election so that each camp was fully briefed and aware of any activities that could have a bearing on our nation’s security.

The peaceful transition of government has always been one of the defining moments in American history. With the new transition policies now in place, perhaps we will be able to add the word “efficient” to our description of the Presidential transition.

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Fee Schedule Final Rule Published

In the October issue of the Washington Report, we provided an overview of the 2009 Physician Fee Schedule final rules based upon the early release document put out by the Centers for Medicare and Medicaid Services (CMS) in late October. As was noted at that time, the policies outlined in that release did not become official until the document was published in the Federal Register. Although many of the issues addressed in the final rule were covered in the October Report, we thought it would be worthwhile to highlight those and other issues in the November Washington Report.

The November 19, 2008 issue of the Federal Register includes a final rule with comment period which implements changes to the physician fee schedule (PFS) and other Medicare Part B payment policies for 2009. The rule finalizes the CY2008 interim relative value units (RVUs) and issues interim RVUs for CY2009. The final rule also announces the physician fee schedule update is 1.1 percent for CY2009 and the conversion factor (CF) at $36.0666.

Physician and Non-physician Practitioner (NPP) Enrollment Issues

For the purposes of this rule, CMS has defined NPPs as including, though not limited to: anesthesiology assistants, audiologists, certified nurse midwives, certified registered nurse anesthetists (CRNA), clinical social workers, nurse practitioners (NPs) physician assistants (PAs), clinical psychologists, speech language pathologists, and registered dieticians or nutrition professionals. Currently, physicians and NPPs may submit Medicare claims for services furnished up to 27 months prior to enrollment in the Medicare program. However, CMS has become concerned that while individuals may meet Medicare enrollment requirements, they may fail to meet other programmatic requirements. In response, CMS had proposed two approaches to establish the date on which Medicare privileges may be awarded.

After reviewing all comments, CMS has decided that billing privileges will begin the latter of: (1) the date of filing of a Medicare enrollment application that was subsequently approved by Medicare contractor (that is, a carrier, fiscal intermediary or A/B Medicare Administrative Contractor); or (2) the date a physician, NPP or physician and NPP organization first started furnishing services at its new practice location. Receipt of application will be determined by the date the Medicare contractor receives both an electronic copy of the application and a signature page containing an original signature.

In addition, CMS has defined a physician or non-physician practitioner (NPP) organization to include “any physician or NPP organization that enrolls in the Medicare program as a sole proprietorship or any organizational entity.” This may include but is not limited to limited liability corporations, Subchapter S corporations, partnerships, professional limited liability corporations, professional corporations, and professional associations.

As has been previously reported, to assist in the process of enrollment, CMS has been developing an internet-based Provider Enrollment Chain and Ownership System (PECOS). The new PECOS on-line system will be phased in during three stages, the first of which will begin by the end of CY 2008. CMS announced on December 4, that the first 15 states and the District of Columbia had been approved for use of the PECOS on-line system. Information about this on-line opportunity is being sent to the HBMA membership in a special announcement.

Phase I will implement PECOS for all individual physicians and NPPs enrolling or making a change to an existing enrollment record. Phase II will extend PECOS to all organizational providers and suppliers enrolling or making a change in their Medicare enrollment records, except suppliers of durable medical equipment, prosthetics, Orthotics, and supplies (DMEPOS). Phase II is tentatively expected to begin in Spring 2009, will full implementation scheduled for June 30, 2009. Phase III, is tentatively scheduled for implementation in CY 2010. This will extend PECOS on-line to DMEPOS suppliers.

While CMS encourages providers and suppliers to utilize PECOS on-line, the option to submit paper applications will still be available. To ensure the security of the PECOS system, CMS encourages providers not to share their login information and passwords with staff or affiliates. Those physicians and NPPs choosing to use billing companies, clearinghouses, or academic medical institutions to handle their enrollment or updating, will be required to submit an enrollment application or make a change in their record using paper copies. In such cases, CMS will verify that the individual or affiliate in question is authorized by the supplier or provider to make such changes via PECOS. HBMA has expressed its strong objections to this policy of restricting use of the on-line system in such a manner and hopes to work with CMS to change this policy.

Retrospective billing privileges will be limited to 30 days before the filing of an enrollment application. This billing period can be extended to 90 days in the event of a Presidentially declared disaster.

CMS will require Medicare billing privileges be denied rather than the application rejected in the event of incomplete application. This is in order to preserve the initial date of application filing. In the case of an appeal that overturns the “incomplete” determination, the original date of filing will stand. In the case of an appeal which does not overturn the “incomplete” determination, the date of resubmission will stand as the new date of filing.

With regard to tax delinquency, CMS notes that it does not consider tax debt held with the IRS in its determination of Medicare billing privileges. However, a Federal conviction related to tax abuses within 10 years of enrollment or revalidation may result in denial or revocation of such privileges.

Beginning in 2009, the Federal Payment Levy Program (FPLP) will identify debtors attempting to collect Medicare payments under either Part A or Part B with a tax debt and offset the debt through a payment reduction. The FPLP will not be applicable to those individuals whose benefits are reassigned to a third party, i.e. group practices where tax delinquency exists. CMS will monitor collection and the extent to which the FPLP is obstructed from directly collecting and will consider revoking billing privileges in future situations where delinquency exists through a third party.

The final rule notes that in cases where CMS has received reliable information that an overpayment, fraud, or willful misrepresentation exists, payment suspension will be imposed until the matter is resolved. CMS is also adopting a policy of denying an application for additional billing privileges to any physician, NPP or delegated official whose Medicare billing privileges have been suspended. The denial will stand until the issue is resolved.

The final rule will require physicians, NPPs or physician and NPP organizations to notify their Medicare contractor of a change in ownership, practice location, or any final adverse action within 30 days of the reportable event. With the exception of a Presidentially declared disaster, CMS expects providers or suppliers to notify their Medicare contractor within 30 days of the relocation. Failure to do so will result in an overpayment assessment for the difference in payment rates for the period in question. CMS will not reprocess claims for the period in question. In addition, a violation may result in revocation of billing privileges.

CMS will also require providers to maintain ordering and referring documentation, including the NPI, received from a physician or eligible NPP for a period of 7 years from the date of service. Failure to comply with documentation requirements will be used as justification for revocation of Medicare billing privileges. The period of documentation applies to services furnished on or after the date of this final rule.

In the case of a physician whose billing privileges have been revoked, CMS will require a physician, NPP, or physician or NPP organization to submit all outstanding claims not previously submitted within 60 days of the effective date of when billing privileges were revoked.

The final rule covers 513 pages of material.If you would like to review the entire document, you can go to:

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Economic Woes Affecting Healthcare Community

It has often been thought that healthcare was “recession proof”. While the demand for housing or cars may wax and wane, the demand for healthcare would always remain strong. Nothing in that basic formulation has changed, but the larger economic woes that confront our economic are beginning to be felt in healthcare.